Correlation Between CRRC and Yokohama Rubber

Can any of the company-specific risk be diversified away by investing in both CRRC and Yokohama Rubber at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CRRC and Yokohama Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CRRC Limited and The Yokohama Rubber, you can compare the effects of market volatilities on CRRC and Yokohama Rubber and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CRRC with a short position of Yokohama Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of CRRC and Yokohama Rubber.

Diversification Opportunities for CRRC and Yokohama Rubber

0.07

Correlation Coefficient

CRRC  Yokohama Rubber

Significant diversification

The 3 months correlation between CRRC and Yokohama is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CRRC Limited and The Yokohama Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokohama Rubber and CRRC is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CRRC Limited are associated (or correlated) with Yokohama Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokohama Rubber has no effect on the direction of CRRC i.e., CRRC and Yokohama Rubber go up and down completely randomly.

Pair Corralation between CRRC and Yokohama Rubber

If you would invest  1,950  in The Yokohama Rubber on October 11, 2024 and sell it today you would earn a total of  110.00  from holding The Yokohama Rubber or generate 5.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

CRRC Limited  vs.  The Yokohama Rubber

CRRC Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CRRC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CRRC is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Yokohama Rubber

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Yokohama Rubber are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Yokohama Rubber may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CRRC and Yokohama Rubber

The main advantage of trading using opposite CRRC and Yokohama Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CRRC position performs unexpectedly, Yokohama Rubber can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Yokohama Rubber will offset losses from the drop in Yokohama Rubber's long position.

The idea behind CRRC Limited and The Yokohama Rubber pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.